Payments
"50 Third, the CFPB amended the Prepaid Accounts Rule to create an exception from the rule's hybrid prepaid-credit card provisions for digital wallets linked to credit card accounts that meet certain conditions.51 A hybrid prepaid-credit card is a prepaid card that has access to "over...
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| description | "50 Third, the CFPB amended the Prepaid Accounts Rule to create an exception from the rule's hybrid prepaid-credit card provisions for digital wallets linked to credit card accounts that meet certain conditions.51 A hybrid prepaid-credit card is a prepaid card that has access to "overdraft credit features" offered by the prepaid account issuer, an affiliate of the issuer, or the issuer's business partner.52 Under the Prepaid Accounts Rule, a digital wallet that can store funds is a prepaid account under Regulation E.53 In response to the CFPB's proposed March 2017 amendments to the Prepaid Account Rule, a digital wallet provider whose wallet can store funds (and thus is a prepaid account) commented that it was concerned that a digital wallet could be covered by the hybrid prepaid-credit card provisions of the Prepaid Accounts Rule "where a consumer links a digital wallet account to credit card accounts that are offered by companies with which the digital wallet provider has cross-marketing or other arrangements that would create a business partner relationship" under the 2016 version of the Prepaid Account Rule.54 The commenter was concerned that a number of provisions applicable to hybrid prepaid-credit cards, such as the thirty-day waiting period after the registration of a prepaid account before a card issuer can solicit or open new credit features or the long-form disclosure requirements of Regulation E, would harm consumers, including by causing customer confusion and reducing consumer choice.55 In response to the digital wallet provider's concerns, the CFPB created a limited exemption from the definition of "business partner" for arrangements between credit card issuers and prepaid account issuers that satisfy all of the following conditions: (1) the linked credit card account is an open-end consumer credit card accessible through a traditional credit card; (2) the prepaid card must not be allowed to draw or transfer credit from the credit card account for the purpose of completing transactions with the prepaid card unless the consumer has sent a written request authorizing the linkage of the two accounts that is signed and initialized separately; (3) the acquisition or retention of the prepaid account or the credit card account must not be conditioned on whether the consumer has authorized the linkage of the two accounts; and (4) the terms and conditions of the accounts are not varied depending upon whether the accounts are linked.56 The linked cred |
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Article 4A Cases Misdescription of Beneficiary (U.C.C. 4A-207) In Peter E. Shapiro, P.A. v. Wells Fargo Bank, N.A., the District Court for the Southern District of Florida analyzed Wells Fargo's liability under U.C.C. section 4A-207 (as adopted in Florida) for processing a payment order that contained an inconsistency between the account name and number.60 Under U.C.C. section 4A-207, "if the beneficiary's bank does not know that the name and number refer to different persons, it may rely on the number as the proper identification of the beneficiary of the order. "78 A number of courts in 2018 rejected attempts by plaintiffs to assert common law claims in cases involving funds transfers, where the common law claims were based upon matters governed by the provisions of U.C.C. Article 4A and not premised on a duty outside the scope of U.C.C. Article 4A owed by the defendant to the plaintiff.79 In contrast, the U.S. District Court for the Western Dis trict of Texas in 3T Oil & Gas Services, LLC v.JPMorgan Chase Bank, N.A. held that the plaintiff's negligent misrepresentation claim was not displaced by U.C.C. Article 4A because it was premised on an alleged misrepresentation made by the defendant after completion of the wire transfer at issue in the case.80 Cases Involving Articles 3 and 4 of the U.C.C. Scope There are a number of benefits for a holder of an instrument that qualifies as such under Article 3 of the U.C.C. The signature of the owner is presumed valid,81 a holder can be a holder in due course that takes free of defenses the payor may have against the original payee,82 the instrument can be used to reach an accord and satisfaction of a disputed claim,83 the instrument can be pledged as collateral giving the pledgee the right to enforce it,84 and an instrument can serve as the basis for a claim of conversion in a proper case.85 Several cases decided in 2018 deal with the qualifications for an instrument under Article 3 to be able to claim a benefit as a holder of it. [...]their claims against the collecting bank were barred. According to the plaintiffs' complaint, when the plaintiffs were told by the defendant bank's teller that two on-us checks totaling $365,000 deposited to their account had cleared, the plaintiffs returned as "satisfied" a promissory note to the drawer.</description><identifier>ISSN: 0007-6899</identifier><identifier>EISSN: 2164-1838</identifier><language>eng</language><publisher>Chicago: American Bar Association</publisher><subject>Amendments ; Banks ; Consumer protection ; Contract law ; Federal court decisions ; Financial institutions ; Forgery ; Fraud ; Liability ; Payment ; Prepaid debit cards ; Prepaid services ; Regulation CC ; Regulation J ; Regulation Z ; State court decisions ; Surveys ; Survey—Uniform Commercial Code ; Transfer of funds ; Uniform Commercial Code-US ; Warranties</subject><ispartof>The Business Lawyer, 2019-09, Vol.74 (4), p.1243-1266</ispartof><rights>COPYRIGHT 2019 American Bar Association</rights><rights>Copyright American Bar Association Fall 2019</rights><lds50>peer_reviewed</lds50><woscitedreferencessubscribed>false</woscitedreferencessubscribed></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><linktopdf>$$Uhttps://www.jstor.org/stable/pdf/27171028$$EPDF$$P50$$Gjstor$$H</linktopdf><linktohtml>$$Uhttps://www.jstor.org/stable/27171028$$EHTML$$P50$$Gjstor$$H</linktohtml><link.rule.ids>312,314,777,781,788,800,57998,58231</link.rule.ids></links><search><creatorcontrib>Klein, Carter</creatorcontrib><creatorcontrib>Denicola, Robert J.</creatorcontrib><title>Payments</title><title>The Business Lawyer</title><description>"50 Third, the CFPB amended the Prepaid Accounts Rule to create an exception from the rule's hybrid prepaid-credit card provisions for digital wallets linked to credit card accounts that meet certain conditions.51 A hybrid prepaid-credit card is a prepaid card that has access to "overdraft credit features" offered by the prepaid account issuer, an affiliate of the issuer, or the issuer's business partner.52 Under the Prepaid Accounts Rule, a digital wallet that can store funds is a prepaid account under Regulation E.53 In response to the CFPB's proposed March 2017 amendments to the Prepaid Account Rule, a digital wallet provider whose wallet can store funds (and thus is a prepaid account) commented that it was concerned that a digital wallet could be covered by the hybrid prepaid-credit card provisions of the Prepaid Accounts Rule "where a consumer links a digital wallet account to credit card accounts that are offered by companies with which the digital wallet provider has cross-marketing or other arrangements that would create a business partner relationship" under the 2016 version of the Prepaid Account Rule.54 The commenter was concerned that a number of provisions applicable to hybrid prepaid-credit cards, such as the thirty-day waiting period after the registration of a prepaid account before a card issuer can solicit or open new credit features or the long-form disclosure requirements of Regulation E, would harm consumers, including by causing customer confusion and reducing consumer choice.55 In response to the digital wallet provider's concerns, the CFPB created a limited exemption from the definition of "business partner" for arrangements between credit card issuers and prepaid account issuers that satisfy all of the following conditions: (1) the linked credit card account is an open-end consumer credit card accessible through a traditional credit card; (2) the prepaid card must not be allowed to draw or transfer credit from the credit card account for the purpose of completing transactions with the prepaid card unless the consumer has sent a written request authorizing the linkage of the two accounts that is signed and initialized separately; (3) the acquisition or retention of the prepaid account or the credit card account must not be conditioned on whether the consumer has authorized the linkage of the two accounts; and (4) the terms and conditions of the accounts are not varied depending upon whether the accounts are linked.56 The linked credit card account is still covered by the protections afforded to open-ended credit card accounts under Regulation Z.57 Fourth, the final rule expands the ability of prepaid account issuers to run negative balances on prepaid accounts without triggering hybrid prepaid credit card protections, even if a covered separate credit feature offered by a business partner is attached to the prepaid account, so long as certain conditions are satisfied.58 Under the 2016 version of the Prepaid Accounts Rule, the exception was not available where the prepaid card could access credit from a covered separate credit feature accessible by a hybrid prepaid-credit card, among other restrictions.59 U.C.C. Article 4A Cases Misdescription of Beneficiary (U.C.C. 4A-207) In Peter E. Shapiro, P.A. v. Wells Fargo Bank, N.A., the District Court for the Southern District of Florida analyzed Wells Fargo's liability under U.C.C. section 4A-207 (as adopted in Florida) for processing a payment order that contained an inconsistency between the account name and number.60 Under U.C.C. section 4A-207, "if the beneficiary's bank does not know that the name and number refer to different persons, it may rely on the number as the proper identification of the beneficiary of the order. "78 A number of courts in 2018 rejected attempts by plaintiffs to assert common law claims in cases involving funds transfers, where the common law claims were based upon matters governed by the provisions of U.C.C. Article 4A and not premised on a duty outside the scope of U.C.C. Article 4A owed by the defendant to the plaintiff.79 In contrast, the U.S. District Court for the Western Dis trict of Texas in 3T Oil & Gas Services, LLC v.JPMorgan Chase Bank, N.A. held that the plaintiff's negligent misrepresentation claim was not displaced by U.C.C. Article 4A because it was premised on an alleged misrepresentation made by the defendant after completion of the wire transfer at issue in the case.80 Cases Involving Articles 3 and 4 of the U.C.C. Scope There are a number of benefits for a holder of an instrument that qualifies as such under Article 3 of the U.C.C. The signature of the owner is presumed valid,81 a holder can be a holder in due course that takes free of defenses the payor may have against the original payee,82 the instrument can be used to reach an accord and satisfaction of a disputed claim,83 the instrument can be pledged as collateral giving the pledgee the right to enforce it,84 and an instrument can serve as the basis for a claim of conversion in a proper case.85 Several cases decided in 2018 deal with the qualifications for an instrument under Article 3 to be able to claim a benefit as a holder of it. [...]their claims against the collecting bank were barred. According to the plaintiffs' complaint, when the plaintiffs were told by the defendant bank's teller that two on-us checks totaling $365,000 deposited to their account had cleared, the plaintiffs returned as "satisfied" a promissory note to the drawer.</description><subject>Amendments</subject><subject>Banks</subject><subject>Consumer protection</subject><subject>Contract law</subject><subject>Federal court decisions</subject><subject>Financial institutions</subject><subject>Forgery</subject><subject>Fraud</subject><subject>Liability</subject><subject>Payment</subject><subject>Prepaid debit cards</subject><subject>Prepaid services</subject><subject>Regulation CC</subject><subject>Regulation J</subject><subject>Regulation Z</subject><subject>State court decisions</subject><subject>Surveys</subject><subject>Survey—Uniform Commercial Code</subject><subject>Transfer of funds</subject><subject>Uniform Commercial 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Carter</creatorcontrib><creatorcontrib>Denicola, Robert J.</creatorcontrib><collection>Gale Business: Insights</collection><collection>Business Insights: Essentials</collection><collection>Gale OneFile: LegalTrac</collection><collection>Global News & ABI/Inform Professional</collection><collection>Trade PRO</collection><collection>ProQuest Central (Corporate)</collection><collection>ABI/INFORM Collection</collection><collection>ABI/INFORM Global (PDF only)</collection><collection>ProQuest Central (purchase pre-March 2016)</collection><collection>ABI/INFORM Global (Alumni Edition)</collection><collection>Banking Information Database (Alumni Edition)</collection><collection>ProQuest Pharma Collection</collection><collection>International Bibliography of the Social Sciences (IBSS)</collection><collection>ProQuest Central (Alumni) (purchase pre-March 2016)</collection><collection>ABI/INFORM Collection (Alumni Edition)</collection><collection>Research Library (Alumni 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Collection</collection><collection>ABI/INFORM Professional Advanced</collection><collection>ABI/INFORM Professional Standard</collection><collection>ABI/INFORM Global</collection><collection>Banking Information Database</collection><collection>Research Library</collection><collection>Research Library (Corporate)</collection><collection>ProQuest One Business</collection><collection>ProQuest One Business (Alumni)</collection><collection>ProQuest One Academic Eastern Edition (DO NOT USE)</collection><collection>ProQuest One Academic</collection><collection>ProQuest One Academic UKI Edition</collection><collection>ProQuest Central Basic</collection><collection>SIRS Editorial</collection><jtitle>The Business Lawyer</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Klein, Carter</au><au>Denicola, Robert J.</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Payments</atitle><jtitle>The Business Lawyer</jtitle><date>2019-09-22</date><risdate>2019</risdate><volume>74</volume><issue>4</issue><spage>1243</spage><epage>1266</epage><pages>1243-1266</pages><issn>0007-6899</issn><eissn>2164-1838</eissn><abstract>"50 Third, the CFPB amended the Prepaid Accounts Rule to create an exception from the rule's hybrid prepaid-credit card provisions for digital wallets linked to credit card accounts that meet certain conditions.51 A hybrid prepaid-credit card is a prepaid card that has access to "overdraft credit features" offered by the prepaid account issuer, an affiliate of the issuer, or the issuer's business partner.52 Under the Prepaid Accounts Rule, a digital wallet that can store funds is a prepaid account under Regulation E.53 In response to the CFPB's proposed March 2017 amendments to the Prepaid Account Rule, a digital wallet provider whose wallet can store funds (and thus is a prepaid account) commented that it was concerned that a digital wallet could be covered by the hybrid prepaid-credit card provisions of the Prepaid Accounts Rule "where a consumer links a digital wallet account to credit card accounts that are offered by companies with which the digital wallet provider has cross-marketing or other arrangements that would create a business partner relationship" under the 2016 version of the Prepaid Account Rule.54 The commenter was concerned that a number of provisions applicable to hybrid prepaid-credit cards, such as the thirty-day waiting period after the registration of a prepaid account before a card issuer can solicit or open new credit features or the long-form disclosure requirements of Regulation E, would harm consumers, including by causing customer confusion and reducing consumer choice.55 In response to the digital wallet provider's concerns, the CFPB created a limited exemption from the definition of "business partner" for arrangements between credit card issuers and prepaid account issuers that satisfy all of the following conditions: (1) the linked credit card account is an open-end consumer credit card accessible through a traditional credit card; (2) the prepaid card must not be allowed to draw or transfer credit from the credit card account for the purpose of completing transactions with the prepaid card unless the consumer has sent a written request authorizing the linkage of the two accounts that is signed and initialized separately; (3) the acquisition or retention of the prepaid account or the credit card account must not be conditioned on whether the consumer has authorized the linkage of the two accounts; and (4) the terms and conditions of the accounts are not varied depending upon whether the accounts are linked.56 The linked credit card account is still covered by the protections afforded to open-ended credit card accounts under Regulation Z.57 Fourth, the final rule expands the ability of prepaid account issuers to run negative balances on prepaid accounts without triggering hybrid prepaid credit card protections, even if a covered separate credit feature offered by a business partner is attached to the prepaid account, so long as certain conditions are satisfied.58 Under the 2016 version of the Prepaid Accounts Rule, the exception was not available where the prepaid card could access credit from a covered separate credit feature accessible by a hybrid prepaid-credit card, among other restrictions.59 U.C.C. Article 4A Cases Misdescription of Beneficiary (U.C.C. 4A-207) In Peter E. Shapiro, P.A. v. Wells Fargo Bank, N.A., the District Court for the Southern District of Florida analyzed Wells Fargo's liability under U.C.C. section 4A-207 (as adopted in Florida) for processing a payment order that contained an inconsistency between the account name and number.60 Under U.C.C. section 4A-207, "if the beneficiary's bank does not know that the name and number refer to different persons, it may rely on the number as the proper identification of the beneficiary of the order. "78 A number of courts in 2018 rejected attempts by plaintiffs to assert common law claims in cases involving funds transfers, where the common law claims were based upon matters governed by the provisions of U.C.C. Article 4A and not premised on a duty outside the scope of U.C.C. Article 4A owed by the defendant to the plaintiff.79 In contrast, the U.S. District Court for the Western Dis trict of Texas in 3T Oil & Gas Services, LLC v.JPMorgan Chase Bank, N.A. held that the plaintiff's negligent misrepresentation claim was not displaced by U.C.C. Article 4A because it was premised on an alleged misrepresentation made by the defendant after completion of the wire transfer at issue in the case.80 Cases Involving Articles 3 and 4 of the U.C.C. Scope There are a number of benefits for a holder of an instrument that qualifies as such under Article 3 of the U.C.C. The signature of the owner is presumed valid,81 a holder can be a holder in due course that takes free of defenses the payor may have against the original payee,82 the instrument can be used to reach an accord and satisfaction of a disputed claim,83 the instrument can be pledged as collateral giving the pledgee the right to enforce it,84 and an instrument can serve as the basis for a claim of conversion in a proper case.85 Several cases decided in 2018 deal with the qualifications for an instrument under Article 3 to be able to claim a benefit as a holder of it. [...]their claims against the collecting bank were barred. According to the plaintiffs' complaint, when the plaintiffs were told by the defendant bank's teller that two on-us checks totaling $365,000 deposited to their account had cleared, the plaintiffs returned as "satisfied" a promissory note to the drawer.</abstract><cop>Chicago</cop><pub>American Bar Association</pub><tpages>24</tpages></addata></record> |
| fulltext | fulltext |
| identifier | ISSN: 0007-6899 |
| ispartof | The Business Lawyer, 2019-09, Vol.74 (4), p.1243-1266 |
| issn | 0007-6899 2164-1838 |
| language | eng |
| recordid | cdi_proquest_reports_2308832484 |
| source | HeinOnline Law Journal Library; Business Source Complete; Jstor Complete Legacy |
| subjects | Amendments Banks Consumer protection Contract law Federal court decisions Financial institutions Forgery Fraud Liability Payment Prepaid debit cards Prepaid services Regulation CC Regulation J Regulation Z State court decisions Surveys Survey—Uniform Commercial Code Transfer of funds Uniform Commercial Code-US Warranties |
| title | Payments |
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